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Airline Management

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UPDATE: OMG ! Bombardier Inc. released its 1st Half 2017 Results, not good as expected. Total revenue $7.668B (down 6.7% on 1H/2016). BCA (Bombardier Commercial Aircraft), just 35 deliveries down from 47 in 1H/2016 (down 25.5%) and revenue down 14.4% on 1H/2016 with average discounting of 31% off list prices. Meanwhile, Q400 down to 31 orders in backlog (14 months of production), production down 21% (just 2.16 per month) on 2016, 13 deliveries and 13 orders, book to bill 1.0. CRJ line down to 47 orders in backlog (14 questionable CRJ-1000’s with just 54 deliveries in 7 years), production down 35% (just 2.5 per month) on 2016, 15 deliveries and just 10 new orders, so book to bill just 0.67. CSeries, NO new order in 2017, only 2 x CS300’s ordered in the past 15 months, yes an absolute sales & marketing ‘disaster’ from the “dream team”, but 7 were delivered (1.16 per month) yay ! whopee ! Only 65 business jet deliveries (down from 73 in 1H/2016) while revenue down 13.8% on 1H/2016. Now, all eyes are on US Commerce Department decision September 25th in regard to imposing countervailing duties on the CSeries of up to 79% for basically ‘illegal state aid’ to Bombardier by Ottawa and Quebec, and another 79% duty for anti-dumping, basically selling the CSeries a whole lot cheaper in the USA, to Delta Air Lines, then back at home to say Porter Airlines. An unfavorable ruling will shut the struggling CSeries program (320 orders in 9+ years, with +20% ‘questionable’ still) out of the all important US market, as if the program needed more problems ? Light at the end of the tunnel for BCA ? China, either Comac acquisition or lots of CSeries orders from there, or both, as orders in China for CSeries, Q400 and maybe CRJ will come easier if under Comac, its the only possible ‘white knight’ for struggling BCA, like it or not.

READ: more on Bombardier or other topics by clicking categories on the right. Well today Bombardier Inc. released its 1st half 2017 results, and and its not good, as revenue is down 6.7% to $7.668B on 2016, this company is NOT going to be a $25.0B a year company in 2020 as planned in its … Continue reading

SUMMARY: While India’s aerospace industry is growing, most of it is on the military side while commercial aviation is far behind, yet HAL (Hindustan Aircraft Ltd) started with license production of the Hawker Siddley 748 turboprop airliner almost 40 years ago (89 built) and then in the mid-1980’s continued with the Dornier 228 (till now +125 built), and that is is ? Oh, lets not forget the never ending 29 year development of the NAL Saras, a 14 passenger pusher turboprop resurrected earlier this year again, for what ? its too small for India’s needs. The Indians know they need bigger aircraft, have the “plans” for the 80-90 seat Regional Transport Aircraft (RTA) turboprop and the 70-100 seat Indian Regional Jet (IRJ), but as of now its just talk and nice computer generated pictures. Of the top 7 major aerospace manufacturing nations, India is ranked 7th, yet was ahead of the Chinese 30 years ago, but it has not moved forward, while the Chinese now have the ARJ-21, C919 and soon MA-700 turboprop, all India has is the little 19 passenger Dornier 228, and that is it. What is India waiting for ? it has a huge market for aircraft between 19 to 100+ passenger turboprops and jets, it could have been a major competitor in that segment to Brazil, Canada and China, but its out of the game, too late now because too many new players in the market, Japan (MRJ-75/90), Turkey (TR/TRJ-628), Russians (SSJ100, MC-21) and Indonesia (N219), and other nations to come ?

 India’s commercial aircraft industry struggles to get “off the ground”, yet it has had years of experience and some success, but today it is sadly out of the game. Hindustan Aeronautics Ltd. (HAL) first licence production was in the early 1980’s to 1988 the 44 passenger British HS-748 turboprop, of which 380 were built, and … Continue reading

SUMMARY: Canada’s Viking Air is shutting down its expensive $7.5M Series 400 Twin Otter production for 90 days and laying off 212 workers (46% of work force) as deliveries have exceeded sales for sometime and one cannot live off one’s backlogs for too long before you have “white tails”, which apparently there are 6 right now in Calgary. The 19 seat utility market is tough, roughly 33 aircraft deliveries per year by just 4 OEM’s, and surely no one really makes money in the market ? While Viking has delivered 120 in the past 7 years, it is far short of the 2006 forecast of 440 (at a price of $3.195M) over 10 years (off by 300%). Could the much higher price (+134% on 2006 price) have something to do with the lower demand ? off course like with all the other OEM’s, the high price ($279,000 to $447,000 per passenger seat) has killed the market (B737-800/A320 at around $275,000 per passenger seat), but with very low production rates what can you do ? Nothing ! Now, Viking is looking at the out of production turbine powered $37M per copy CL-415 water bomber as a possible new production program. The turbine CL-415 had just 90 deliveries in 22 years of production (4.1 per year) while the radial engine CL-215 had 125 deliveries over 21 years (6.0 per year), so no BIG market here in water bombers, maybe 4 to 5 per year ? but I think a 30 seat regional amphibian can make a difference, the CL-215C ‘Transport’ (2 delivered to Venezuela long ago) is a 30 to 36 passenger certified version and the market is out there all over the world, more than for a firefighter, and surely another 4 to 5 CL-415C ‘Transport’ per year, can change the business case for re-starting the production line for the CL-415 ? 10 aircraft and $+375M in annual revenue sounds good (that is equivalent to 50 x Series 400’s).

READ” Blog on 2016 Turboprop Market (click General Aviation) for more info on the 19 seat market in the March 9, 2017 issue   Viking Air has announced on May 31, 2017 that it is shutting down production of its $7.5 million Twin Otter Series 400 for 90 days and will lay off 212 starting … Continue reading

SUMMARY: The Caribbean is a “graveyard” for airlines over 40 in the past 30 years, with 6 government owned airlines still flying and still burning taxpayers money, destined to never make money because they never change, till now. Cayman Airways, owned by the British Overseas Territory of the Cayman Islands has been changing quietly for years, reducing its debt, modernizing its fleet with 4 x B737-8 (Max8’s), but still dependent on $20+M per year from the government. A new modern fleet will help reduce operating costs but lease rates will be 6 times more than the B737-300’s, and new routes like the latest to Roatan, Hondurans are a good sign of expansion. It is at least a change, the other 5 government owned airlines are ‘business as usual’, politicians sticking their noses into everything they don’t understand, no new initiatives, no new strategy, no new leadership, just sitting around their desks “doing the same things over and over again expecting different results” (Einstein’s definition of insanity) and it applies so well to these 5 perpetual money losers. Only radical change will bring about a brighter future for Government owned Caribbean airlines, its time for surgery to revive them or its time for euthanasia, and cut off their life support (aka taxpayers money) ? one or the other, but things cannot keep going on usual, at some point creditors will have had enough, and then its THE END.

I have written about the Caribbean airline fiasco for years, you can read previous Blog articles on LIAT, Surinam Airways, InselAir, etc.by clicking on State Owned Airlines (under Categories) For many years I have written about the plight of Caribbean airlines, and the infamous region I call a “graveyard” for airlines. Yes, the list of … Continue reading

SUMMARY: Is it too Early to Bury the A380 ? Then a look at the costly $25.0B, A380-800 program in more detail which has just 317 orders and 210 deliveries for the $436.9M List Price airliner now operated by 13 airlines. As we approach 10 years in service with Singapore Airlines we will see the first used A380’s to come to the used market (for airline and possibly VVIP/Head of State use). Does the big 4 engine airliner have a future ? a niche ? as it is the lowest cost per unit (CASK) airliner in the world at Emirates, where some are configured with 615 seats, and its why Malaysian Airlines is putting in 700 seats on its A380’s for Hajj and other charters, wile ANA will have 600+ seats in its 3 x A380s for its high demand leisure flights from Japan to Hawaii, replacing 2 x B767-300’s flights with one A380 flight, a sign of some new potential for the “Queen” of the skies ? Lets hope so.

https://www.aerotime.aero/en/civil/18805-is-it-too-early-to-bury-the-a380 ————————————————————————————————————————————————————————————— With permission from Aerotime Is it too early to bury the A380? Published on: May, 19, 2017 Source and image:Oleg Volkov Airbus A380 is big, beautiful, and notoriously problematic when it comes to airport availability and – most importantly – profitability. For some, like Emirates, it is still a signature aircraft that is … Continue reading

SUMMARY: The General Aviation turboprop deliveries are out for 1st Quarter, 2017 and deliveries are down to 99 aircraft and $273.M in revenue, from 109 deliveries in 1Q/2016 (-9.1%). The decline is due to the large drop in the Twin Turboprop Pressurized Segment, which had only 12 deliveries of King Airs (and NO Piaggio Avanti Evo) versus 27 deliveries (inc. 1 x Piaggio Avanti Evo) in 2016, a drop of 55%, what is happening to the King Air demand or the “walking dead” Piaggio Avanti EVO ? The Agricultural Turboprop Segment did the best with 46 deliveries up from 38 in 2016 (+27.7%) with revenues of $54.1M. The Single Engine Pressurized Segment was stagnant at 23 deliveries as in 2016, with Pilatus delivering 4 less (-25%) PC-12NG’s than in 2016, and total revenue of $98.7M (+26% more than the twin market). The Single Engine Utility market was down to 18 deliveries and had revenue of $42.1M on the back of 4 (-33%) fewer Caravan deliveries, but Quest’s Kodiak was up to 9 deliveries (+80%) over 2016 delivery of 4 aircraft. The big “loser” this past Quarter is Textron Aviation with 12 King Air deliveries down from 26 and then the Caravan with deliveries down to 8 from 12 last year, so what’s up at Textron ? as 16 less turboprops were delivered versus 2016. The “winners” are Quest Aircraft’s Kodiak with 9 deliveries up from 5 last year, and the Air Tractor with 36 deliveries up from 28, a good start for most, but Textron ?

  READ MORE ON THE TURBOPROP MARKET, JUST CLICK ON GENERAL AVIATION   The First Quarter, 2017 General Aviation turboprop deliveries are out from GAMA, and total aircraft unit deliveries are down (-9.1%) to 99 from 109 in 1st Quarter, 2016 and total revenue was $273.2M ($2.75M per average aircraft delivered). ————————————————————————————————————————————————————————————— The Agricultural Aircraft … Continue reading

SUMMARY: A small airline in Thunder Bay, Ontario, North Star Air Ltd. has been bought for $C 31M ($US 23M) by Winnipeg based North West Company (NWC), a large Canadian grocery and retail company with +218 stores, many in remote and isolated communities across Canada’s North. The driver of this deal was to control its distribution by having its own cargo airline, and not being dependent on what is basically a air cargo monopoly by Calm Air in the Manitoba, Nunavut and Kivalliq regions, where NWC has many stores, and where the First Nations communities are totally dependent on aircraft for all their local needs for most of the year. The acquisition raises the problem of a lack of competition in many parts of the North, where communities and suppliers have all but one choice of airline in and out of many communities, which in many cases allows for high margin “monopoly” pricing. Canada has no Essential Air Service (EAS) like the USA, which subsidizes scheduled air services to 150 markets of which 44 are in remote parts of Alaska with single engine turboprops like the CE-208B to SF340’s and CRJ-200’s at a cost of $250M a year (President Trump looking to cut that). Canadian passengers and suppliers in the North have no choice but to pay the very high fares and freight rates demanded by air operators. Time for a new fresh look at affordable air access in the North ? if we are to develop the North as Ottawa says, then we cannot burden and punish the people there with high fares and freight rates, that make life their very expensive as everything in most communities goes by air, from groceries, lumber to even fuel for electric generators.

It has been pretty quite on the Canadian airline mergers and acquisition front since the late June, 2016 acquisition of Transwest Airlines (Prince Albert, Saskatchewan) by local rival West Wind Aviation (Saskatoon, Saskatchewan). That deal created another Provincial regional airline monopoly, just as EIC (Exchange Income Corporation) has in neighboring Manitoba, where it now owns … Continue reading

SUMMARY: The Chinese COMAC C919 airliner made its first flight today (May 5, 2017), and hopefully it will not be long before it is delivered to its first customer, China Eastern. The Comac ARJ-21-700 regional jet (evolved from the locally built MD-82’s and MD-90-30’s programs) took an incredibly long 2,769 days (93.3 months or 7.6 years) from its first flight to delivery to its first customer. This C919, is NO ARJ-21, this is an aircraft China can be proud of and one that can and will compete with Airbus, Boeing, Irkut and Bombardier when it gets its EASA Type Certificate which will take time, as the shadow certification of the ARJ-21 with the FAA did not materialize. Yes, there will be many issues with very poor sales & marketing, product support and after sales service, something Comac has no experience with and AVIC is horrible at. The ARJ-21 has no FAA certification and most likely never will, and will be relegated to flying for Chinese airlines and the very few “dubious” nations that do not require EASA or FAA certification for local registration and operations. The C919 has 99 orders, 227 options and 566 “commitments” so well over its stated break-even of 400 units. A proud day indeed, given the fiasco with the ARJ-21, now Comac will work with EASA to shadow certify the C919, but that will take a few years for sure, so no immediate concerns for the other 4 competing OEM’s. Lastly, this C919 is not the first Chinese indigenous jet airliner, back in 1970 the Chinese then under Chairman Mao Zedung, developed the Shanghai Y-10, a close similarity to the Boeing B720/B707, but it started way before President Richard Nixon’s famous trip to China in 1972 with Air Force One, a C-137 Stratoliner, a modified long range Boeing B707, referred to as SAM26000 (special air mission), in service from 1962 to 1999.

With the Comac C919 making its first flight, China finally has a commercial aircraft it can be proud off, and this aircraft will be able to compete with the Airbus A320neo, Bombardier’s CS300, Irkut MC-21, Boeing B737-7 and, B737-8 in time as it will require years to get its EASA certification, but Chinese airlines who … Continue reading

SUMMARY: Beautiful, high technology aircraft are great, but do NOT guarantee commercial success, in the end its about meeting customers’ needs rather than on selling a ‘product’, and here lies the problem with Bombardier’s CSeries sales. The company came out with its so-called “game changer” in July, 2008 (yes 9 years ago and yet only 320 orders today), with claims it is 20% more fuel efficient and has 15% lower cash operating costs than currently produced aircraft with a fantasy forecast that 7,000 aircraft over 20 years will be delivered in the 100 to 150 passenger segment ? and it all sounded like they had a “winner”. BUT with low fuel prices and interest rates and airlines up-gauging from smaller 100-150 passenger airliners, the CSeries ‘benefits’ have fallen on deaf ears with airline executives, unless a huge +65% discount is offered to make the deal (e.g. LH, DL, AC, etc.), yet the only CSeries deal done in the past 12 months since the hugely discounted 75 x CS100 deal with Delta Air Lines (Loss to Bombardier of $+/-525M), has been 2 x CS300’s to little known Air Tanzania ? Meanwhile Airbus has accumulated 5,056 orders for its A320neo line and Boeing’s Max line has 3,703 orders. Is there a lesson here for OEM’s ? Off course, “don’t count your chickens before they hatch”.

Check out previous Articles on Bombardier, Commercial Aircraft, Low Cost Airlines, General Aviation, Regional Airlines to Airline Management and Mergers and Acquisitions https://www.linkedin.com/in/tomas-chlumecky-3200a021/recent-activity/posts/   We forget that high tech fantastic aircraft do not add up to commercial success (PHOTOS BELOW: Concorde (Mach 2+ airliner), Canada’s Avro C-102 Jetliner (2nd jet airliner to fly after the … Continue reading

SUMMARY: Canada’s WestJet Airlines, is planning to start a new ultra low cost carrier (ULCC) later this year with 10 x B737-800’s. This will be the first time that a low cost carrier (LCC) that re-positioned itself into a hybrid airline, goes back and starts a ULCC and goes after a market segment they abandoned years before. This is so badly needed in Canada where the top two airlines have a duopoly and control 85% of the domestic capacity, and till today there is NO real low cost carrier (LCC) in Canada, the only major developing country in the world not to have one. In fact, NO US based low cost carrier competes in the Canadian market (yet), and its why +5 million Canadian passengers drive across the US border every year to fly from US airports to save on air travel, by using lower cost US airlines. A ridiculous passenger spillage that no one seems to care about, while the only low cost airline right now coming into Canada is Iceland’s fast growing WOW Air with very low priced deals to Iceland and Europe. The ultra low cost model is growing and even now the US big 3 airlines (DL, UA and AA) are experimenting with their new “Basic Economy” pricing, no amenities, everything ‘extra’ approach, good idea or a dilution of their brands ?

So WestJet Airlines, once Canada’s LCC is starting all over again with another LCC airline of its own ? is this to counter the growing competion from Air Canada’s “LCC” rouge, and the new Canadian planned start-ups like Canada Jetlines, Fly Too (Enerjet with Indigo partners) and NewLeaf now that foreign ownership of a Canadian … Continue reading

SUMMARY: The 2016 General Aviation turboprop deliveries and sales numbers are out from GAMA, and the turboprops were the only segment to record an increase in deliveries (+3.4%), as piston (-4.9%) and especially business jets (-7.9%) are down on 2015 numbers. With 576 turboprop aircraft delivered (and 675 engines, all PT6’s except 10 GE H80 engines) with a sales value of $US 2.057 billion (+8.6%), 2016 was a good year for 3 of the 4 segments (Agricultural, Single engine utility, Single engine pressurized) with Twin turboprop deliveries slightly down (-9.1%). In terms of units, the best segment was the Single engine pressurized with 179 deliveries led by Pilatus with 91 deliveries of its PC-12NG, but new competition is coming soon from Textron’s Denali and EPIC 1000. By sales, the best segment was the Twin Turboprop market, which is dominated by Textron’s King Air (C90/250/350) line with $793 million in sales. While not in GAMA figures, the 5 OEM’s still in the 19 passenger turboprop market, delivered +/- 35 aircraft worth $US 255 million. Lastly, the Agricultural aircraft market is still doing well, with 151 deliveries worth $198 million from crop spraying, fire fighting to actual counter insurgency (COIN) fighting, showing how versatile the turboprops really are today and why we see GE now challenging the P&W PT6 domination of the market for over 50 years.

READ: 2015 GA turboprop results, February 17, 2016 blog. https://www.linkedin.com/in/tomas-chlumecky-3200a021/recent-activity/ Another year has passed and time to do my annual turboprop review. The 2016 GAMA shipment and billing numbers were not good for the industry, with overall billings down from $US 24.1 billion in 2015 to $US 20.7 billion, down 14.1% while unit deliveries were … Continue reading

SUMMARY: Bombardier is looking into upgrading its CRJ line, which after +1,864 deliveries is now down to around +/-58 orders at best in backlog or 14 months of current production (April, 2018). The sad reality is that the CRJ is no longer very competitive against the current Embraer E175 and the new E175/190-E2’s will make the CRJ obsolete, in fact since 2003 it has been in decline and losing market share to Embraer for 14 years and the order backlog is now “critically” low. After having upgraded the CRJ cabins in 2016, now the focus is on possible new engine (unknown at this time), but that is an expensive upgrade versus the current GE CF34 engines, and adds weight, which for a long fuselage aircraft like the 119 foot long CRJ-900, with rear mounted engines is not good for C of G issues. With only 19 CRJ orders in 2016, Bombardier has been milking and living off its backlog, but is there any life for the CRJ really ? even after +/-30% discounts off list price, sales are not impressive anymore. The CRJ is a 1970’s Canadair CL-600 Challenger (the Type Certificate for all CRJ’s), stretched 4 times with a tight cabin width of just 8 feet and 5 inches (2.69 meters) that has been become a 50 then 70 then 85 and finally 104 passenger airliner, while Embraer designed and built the EJets from scratch, and that is now paying off got Embraer and blowing up in Bombardier’s face. At a time when the CSeries is still struggling for orders, Bombardier Aerospace needs all of its products to sell and sell, yet the Learjets, Challenger 650, Global G5000/6000, Q400 and CRJ are sadly in the final decline phase of their product life cycle as new competing products are coming online across all segments..

Follow up to the January 4, 2017 Blog “Lots of Talk about Bombardier’s turnaround”   Bombardier is now looking for solutions to keep its CRJ line open for a couple of years as the backlog now dwindles to 14 months at current production rate of 4.2 per month and current order book. Now paying for … Continue reading

Surinam Airways must ‘think Big’, with a Big vision for the future beyond just Suriname, too many small national carriers think ‘small’ and never achieve their full potential, sticking to old tried ways without much success, yet look at the success of COPA (Panama), Norway Air Shuttle (Norway), Ethiopian Airlines (Ethiopia), Ryanair (Ireland) to Singapore Airlines (Singapore), think Big, plan Big, act Big and do Big things and you become Big in time, step by step. But if you think small, plan small, act small you will always remain small and insignificant and most likely, not profitable.

Surinam Airways must ‘think big’, says aviation expert Published on January 23, 2017 by Caribbean News Now by Ray Chickrie Email To Friend    Print Version  By Ray Chickrie PARAMARIBO, Suriname — In his assessment of Surinam Airways (SLM) (3 x B737-300’s and 1 x A340-300), aviation expert Tomas Chlumecky has called on the airline to “get out … Continue reading

SUMMARY: Lots of talk about Bombardier’s Turnaround, 14,500 layoff announcements this year, or 21,450 in the past 3 years. The Global G7000 flew for the first time and Bombardier expects big things from it to boost Bombardier’s bottom line along with the struggling CSeries, which today still has only 320 orders (NO 40 x CS300’s for Republic Airways, just PR not wanting to reduce the meager order book) and still +/- 86 “questionable” orders (representing 26% of the current 320 orders). Lots of effort in reducing labor costs, yet no one is noticing that the top line (revenue) at Aerospace is a coming disaster, and unsustainable with an old product line (1970’s Learjets and Canadair CL-600/Challenger 650, plus the Global G5000/6000) that is facing new and better competition. The CRJ line has no more than 48 orders in backlog, only 18 orders this year (50% from Canada) good for 12 months of production (February, 2018) with no new orders. The Q400 is down to around 34 orders in backlog and only 25 orders this year (50% also from Canada), good for 14 months (March, 2018) with no new orders. The 2020 Turnaround Plan calls for Aerospace to generate $15 billion in revenue (60% of total revenue planned of $25 billion), with just 2 products ? The Plan requires $5 billion from Commercial aircraft, which by 2020 means only the CSeries (CS100/CS300) is left, and that will require at least 140 deliveries at the current highly competitive low prices to hit the “target”, really ? (2020 production is planned at 90-120 aircraft today). Meanwhile, Business jets are to generate $10 billion by 2020, and that will fall on the $75 million Global G7000 (NO Learjets, Challenger 650 and Global G5000/6000’s by 2020) and that means 133+ G7000 deliveries to hit their “target” ? seriously ? has anyone looked at single aisle ACJ and BBJ sales for the past 15 years ? (+/- 15 a year at best). Canada is providing “state aid” (aka taxpayers money) to Bombardier again ($2.5 billion in 2016 from Quebec), in fact of the $3.39 billion of cash on hand as of Sept 30, 2016, $2.5 billion (71% of cash on hand) came from the Government of Quebec, soon another $1.0 billion will most likely come from Ottawa (PM is from Quebec, and they always “help” Bombardier), and then Quebec and Ottawa will be 66.7% owners of the CSeries program (CSALP – CSeries Aircraft Limited Partnership, a separate company, spun off from Bombardier ??). How did we the Canadian taxpayers become “owners” again of a commercial aircraft program that NO commercial aircraft OEM wanted in 2015 when it was for sale for “a song” ? Especially after we the Canadian taxpayers “SOLD” Bombardier, our government owned Canadair in 1986 (for $120 million) and government owned de Havilland in 1992 (for $100 million) with the rights to the Challenger business jet, later stretched into the CRJ line, and the DHC-8 turboprop airliner later stretched into the DHC-8-Q400 line. Meanwhile, Embraer is going to the WTO again to complain about Bombardier’s “illegal state aid”, while Boeing may go to President-elect Donald Trump and get import tariffs applied on the CSeries and then ? Oh, it is going to be an interesting 2017 for sure, stay tuned to the never ending Bombardier/Quebec/Ottawa “gong show”, as they find new ways to screw Canadian taxpayers to keep Bombardier alive at any cost.

Bombardier has now delivered its first CS100 to Swiss and CS300 to airBaltic and talks confidently of a turnaround next year and a bright future in 2020 as per its 5 year Transformation Plan, that should see company become a $US 25 billion a year company by the end of 2020, with Aerospace to provide … Continue reading

UPDATE: Hold on to your wallets Canada ! Bombardier is seeking more money again for a another new aerospace project ! with the so-called “game changer” CSeries an absolute sales disaster with only 318 orders after +8 years of sales ? and right after announcing its 6th wave of layoffs (another 7,500 are to go by 2018) since January, 2014 (34 months ago) for a total of 21,450 jobs gone ! Meanwhile Bombardier’s CEO admits company nearly went bankrupt in 2015, and it now has $3.4 billion in cash, $2.5 billion (74%) came from the Government of Quebec this year (aka bailout money), without Quebec they would have only $900 million in cash today and be close to bankruptcy. Embraer and Boeing are taking the “illegal state aid” case to the WTO. With President-elect Trump coming in, he’s ready to “defend” US corporations from illegal and unfair state aid backed competitors, and don’t be surprised if he tears up NAFTA and hits the CSeries with new tariffs, a perfect scenario for his PR. Everything in decline at Bombardier Aerospace today, the CSeries has only 318 orders (of which 2 have been delivered), what happened to the existing Commercial Aircraft Market Forecast that claims 7,000 deliveries over 20 years (350 per year) ? all BS, in fact Ascend Consultancy forecasts only 1,340 CSeries deliveries over 20 years (67 per year), down 81% on Bombardier’s “fantasy” forecast. No one has noticed, but with only 34 x Q400 orders in backlog and only 60 CRJ’s in backlog, both programs will run out of orders at current production rates of 2.5 per month and 4.2 per month respectively by January, 2018, and with only 13 options for the Q400 and 18 for the CRJ, 2018 looks like the year the Downsview plant gets closed down and everything gets moved to Quebec, another Cartierville Airport deal in the works ? Business jets deliveries are down 25%, and the old Learjets and the 40 year old Challenger 650 (4th variation of Canadair CL-600, which also gave birth to the CRJ line) are down as well, along with the Global G5000/6000’s, NONE of the current products will be around by 2020, except the CSeries (maybe), the new G7000, and possibly still the Challenger 350, but it won’t be a $15 billion a year business, at best $5.5 billion, and I still believe Combardier is coming (China’s COMAC buying Bombardier Aerospace).

OMG, please NO more money for Bombardier’s projects ! Look the company is in deep trouble, just open your eyes and stop listening to the financial “experts” and Bombardier’s BS PR about being “on track” for recovery ? seriously its a disaster and read on to find out why. The recent 7,500 announced layoffs which … Continue reading

SUMMARY: Learjet, the Bombardier business jet brand it bought (a rare Bombardier deal with NO government aid or subsidies) in 1990 for $US 75 million and took on its $US 38 million debt, is soon to be sold as Bombardier struggles with light mid-size jet sales, having only delivered 6 Learjets in the 1st 6 months of 2016. The failure of the Learjet 85 and its subsequent $2.5 billion write down, sealed the fate of Learjet, which has no chance of future sales growth and is losing value year by year with an “old” product line that struggles against the Textron XLS+ and Embraer Legacy 450 in a very “soft” demand environment, where big price discounting is the weapon of choice, especially by Embraer. After 54 years, the sun will set soon on the Learjet brand that Bill Lear started in 1962 using the Swiss P-16 fighter plane as his “inspiration” for the fast Learjet 23, and his LearStar 600 mid-size business jet concept was sold to Canadair in the late 1970’s, which ultimately became the CL-600 Challenger, the grand daddy of the current line of all CRJ regional jets (+1,836 delivered) and the current and 4th version of the 1970’s Challenger (+1,040 delivered), the CL-650 . The buyer may be Textron Aviation, Bombardier’s competitor with its new Latitude, Longitude and eventually Hemisphere lines, as the current 2,300+ Learjets out there (many for sale) still will need continued technical and maintenance support, now worth around $+300 million a year, and could possibly fetch a maximum $375 million price tag, cash that Bombardier desperately needs to reduce its $6.8 billion debt obligations between 2018-2023, so after selling its flight training to CAE in 2015, and its CL-215/415 water bomber rights to Viking Air in June of this year (no price has been published), and now it looks like the Learjet line is next. BUT it will not be the end of Bombardier’s business aviation problems, a tired and old product line (Learjets, CL-650, Global G5000/6000’s) face new products from competitors (Embraer Legacy 500, Falcon 8X, Textron Longitude and Hemisphere, Gulfstream G500/600) all smelling blood at troubled Bombardier.

CHECK OUT August 16, 2016 article on General Aviation delivery summary for 1st half of 2016.   The Learjet product line is about to end anytime soon, as Bombardier looks to sell the brand, which it bought in 1990 for $US 75 million and took on $US 38 million debt, in fact the ONLY aerospace … Continue reading

UPDATE: Transwest Air is now a fully owned subsidiary of WestWind Aviation, now there is only 1 large regional airline in Saskatchewan, and 80% owned by 2 First Nations economic development corporations (EDC’s). These First Nations EDC’s now pretty much own ALL airlines in Canada’s north, usually through Aboriginal economic development corporations (EDC’s), with a few family and corporate hold outs in the Northwest Territories, especially at Yellowknife (Summit Air, Discovery Air-Air Tindi/Great Slave Helicopters, Buffalo Airways) and in Fort Smith Northwestern Air Lease Ltd. Is this a good thing or a bad thing where First Nations own all air services in Canada’s north ? Is this the only viable exit strategy available in the north or are there “pressures” to sell to local First Nations ? and Can the EDC’s create long term financially sustainable airlines ? First Air (Makivik Corp.) and Canadian North (IDA), have tried to merge several times but each time it has failed, even though it makes lots of economic sense to do it, or is more cooperation among the EDC’s needed, like the recent cooperation between Air North and First Air ?

As to my blog of August 21, 2016, the Transwest Air deal is done and it is now a fully owned subsidiary of WestWind Aviation, which itself is owned 55% by the Athabasca Basin Development (ABD) and 25% owned Prince Albert Development Corporation (PADC), in short 80% First Nation owned with 20% owned by the … Continue reading

UPDATE: Canadian regional airline consolidation continues as the once fragmented industry starts to consolidate around a single provincial operator. After 11 months under Canada’s CCAA (+/- Chapter 11 bankruptcy/reorganization), Quebec based regional airline, Pascan Aviation is acquired by 2 senior executives in a management buyout (MBO). Meanwhile Saskatchewan based WestWind Aviation, fresh from its acquisition of Osprey Wings last November, looks to takeover its main local competitor, Saab 340 operator Transwest Air, itself the product of two old local airlines and their pioneers (Athabasca Airways of Floyd Glass and La Ronge Aviation of Pat Campling) coming together in 2000, leaving WestWind Aviation a monopoly in Saskatchewan, much like Manitoba with Perimeter Airlines, Calm Air, Keewatin Air and Bearskin Airlines, all under one ownership. Times are changing for regional airlines in Canada, as the second generation of airline owners retire or sell of the businesses that their fathers and mothers built from scratch, usually with nothing more than a single Cessna 180 aircraft. Sad to see the old names disappear, it is the “circle of life”, but the legacies of our Canadian aviation pioneers will always remain with us.

UPDATE: As I wrote this, I found out that WestWind Aviation (80% First Nation owned) has bought Transwest Air for an undisclosed amount, now only 1 airline exists in Saskatchewan, like it or not.   This is my follow up to the January 5, 2016 article “Consolidation in the Canadian Regional Airline Industry”, as the … Continue reading

SUMMARY: Bombardier 1st Half results are out, and it is not good for Aerospace. With only 318 firm CSeries orders today and up to 95 “questionable”, the program suffers from poor sales but even worst, negative margins due to deals below cost, this cannot continue for very long. Yes, 2016 is a tough year for aircraft orders at Airbus and Boeing, and a “price war” is on ! and any big deal will require +65% off list price, which means every new order brings more loses for Bombardier. Meanwhile, CRJ line has only 66 orders in backlog (9 x CRJ-700, 36 x CRJ-900 and 21 x CRJ-1000) good for 25 months of production at the current 2.7 aircraft per month rate, while the Q400 is down to 48 in backlog (40 + 8 recent orders), good to May, 2018 at the current 2.3 aircraft per month. Big discounting under way on the Q400 and CRJ is evident in financials to boost sales, while Business Aircraft orders are slowing down, and production already 20% below last year will be reduced again soon to balance supply and demand. Nothing very promising at Bombardier Aerospace, the company struggles and the 5 year Transformation to 2020 does not look promising at all, market dynamics are creating havoc for Bombardier, but all of that had to have been anticipated when they decided to enter the BIG league and take on Airbus and Boeing, maybe not such a great idea after all ?

LOTS OF ARTICLES IN AVIATION DOCTOR ON BOMBARDIER, TAKE A LOOK. Bombardier (TSX:BBD.B) has released its 1st Half 2016 financials and its time to analyze what is going on at Bombardier so far this year in regard to its struggling Commercial and Business aircraft business. The first 6 months of this year, has seen Bombardier’s … Continue reading

SUMMARY: The 1st Half 2016 numbers are out for Air Canada and Westjet Airlines, the “duopoly” that controls +85% of the Canadian market, where Canadians still have NO domestic or transborder access to a low cost airline. A brief analysis of the financial performance of the 2 Canadian airlines this year with a introduction to airline economics on how a few key numbers drive operating profit. Seems Air Canada does not make an operating profit from passenger services alone, and why its LCC (low cost carrier) rouge has not really cut costs, with the vast majority of savings being higher density seating, and like other Major airline attempts at an in-house LCC in North America like TED (United), Song (Delta #2), Lite (Continental), Express (Delta #1) the cost cutting has NOT gone deep enough, and hence why ALL the North American in-house LCC “experiments” ultimately failed. Lastly, Air Canada’s decision to buy 45 x CS300’s was a politically coerced deal with legal and legislative changes promised by Quebec and Ottawa, and the recent Air Canada threat to “walk away” from the deal if promised legislation was not forthcoming soon, said it all, Air Canada’s EVP Kevin Howlett said it best, “there are alternatives to the CSeries, there are other manufacturers that make comparable airplanes”, meaning we can take it or leave don’t matter as they do have 61 x B737Max firm orders (33 x Max8’s and 28 x Max9’s) to replace its older A319/320’s and E190’s in due course.

The 1st half 2016 numbers are in for Air Canada and WestJet Airlines, and it’s worth looking at how the 2 airlines that control 85% of the Canadian domestic market, which also has NO low cost airline as of yet (the only OECS) whose citizens have no access to a domestic or transborder LCC (low … Continue reading